Problem

Majority-Owned Subsidiary Acquired at Book ValueCameron Corporation acquired 70 percent of...

Majority-Owned Subsidiary Acquired at Book Value

Cameron Corporation acquired 70 percent of Darla Corporation’s common stock on December 31, 20X4, for $87,500. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

Item

Cameron Corporation

Darla Corporation

Cash

$ 65,000

$ 21,000

Accounts Receivable

90,000

44,000

Inventory

130,000

75,000

Land

60,000

30,000

Buildings and Equipment

410,000

250,000

Less: Accumulated Depreciation

(150,000)

(80,000)

Investment in Darla Corporation Stock

87,500

 

Total Assets

$692,500

$340,000

Accounts Payable

$152,500

$ 35,000

Mortgage Payable

250,000

180,000

Common Stock

80,000

40,000

Retained Earnings

210,000

85,000

Total Liabilities and Stockholders’ Equity

$692,500

$340,000

At the date of the business combination, the book values of Darla Corporation’s assets and liabilities approximated fair value, and the fair value of the noncontrolling interest was equal to 30 percent of the book value of Darla Corporation. At December 31, 20X4, Cameron reported accounts payable of $12,500 to Darla, which reported an equal amount in its accounts receivable.

Required

a. Give the eliminating entry or entries needed to prepare a consolidated balance sheet immediately following the business combination.


b. Prepare a consolidated balance sheet worksheet.


c. Prepare a consolidated balance sheet in good form.

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search